We all know the consequences that a serious short-term mistake can have for the rest of our lives. That’s why we try to avoid making them. Something like a drunk-driving arrest or getting caught doing a less-than-honest business deal will obviously impact people’s perceptions of who they thought we were in a negative way.
It’s no different for a brand. Brands go to considerable expense and effort to establish a certain identity in the public’s mind. And then, in one fell swoop, that same brand can make one move that completely disrupts that brand—and eventually even destroy it.
For example, remember Packard, the luxury car maker? You’re excused if you don’t, since they went out of business in 1957. But, in the 1930’s, they were the leader in quality cars, not Cadillac. Panicked by the Great Depression, however, they put out a cheaper model to increase sales. They ended up, in the process, surrendering their luxury brand position and were perceived as just another car. Cadillac took the crown and Packard was left in the wrecking yard.
Then there’s Netflix, a huge DVD-delivery success story that helped bury Blockbuster. It was perceived as an incredible, and very affordable, service provider, especially when it began bundling online video streaming with its DVD rentals, an extra service its customers enjoyed at one low monthly price. Cut to July 12, 2011 when the company suddenly split the streaming and the DVD rentals into separately priced services, and saddled its customers with a 60% price hike, if they wanted everything they were already getting. The backlash was severe—so severe that they lost 800,000 subscribers. Even though they reversed course and began bundling the services again, their stock price is still down 70 percent year over year as of this writing.
Here are a few tips to keep in mind when considering a big branding move:
Don’t Break Your Brand Promise
A couple of years ago, Starbucks introduced an instant coffee line to beef up profits during the economic downturn—and "instantly" diluted its brand perception. Obviously, taste is compromised with such a product and Starbucks has always positioned itself as the "quality" coffee alternative (to justify its higher pricing). Time will tell what damage this kind of move will make to their image. Similarly, BMW introduced the BMW 1 series to attract younger buyers. But the cars look cheap and are missing the traditional luxurious amenities that define the BMW brand. Could BMW become the next Packard?
Continue Brand Consistency
Apple is well known for the quality of its product line. But, in 2010, Apple released the iPhone 4, and immediately users began having difficulties with the trendy device. Because of an engineering design problem, calls were being dropped because of how the antenna was implanted in the device. This was a major gaffe for a company that was widely worshipped for how awesome its products worked. And Apple wasn’t done there. Instead of apologizing or offering a free fix, they told customers to either hold the phone differently or purchase an accessory to repair the problem! Quality control is essential to a company like Apple; because their products cost a little more, their customers expect a little more.
Control What’s Beyond Your Control
Sometimes a huge short-term negative event happens that’s beyond the control of the company behind the brand. What can be controlled, however, is the response to that event. Thirty years ago, the Tylenol pain reliever brand faced a very serious threat—a product people trusted was tampered with and seven people died as a result of poisoning. Obviously, this wasn’t Tylenol’s fault, but it took a long-term view and incurred losses of $100 million by stopping production and advertising, clearing the shelves of existing product, and making sure the public was informed of the danger. Johnson & Johnson’s CEO James Burke is credited with saving the product’s brand with his fast and wide-ranging reaction.
Netflix, in contrast, was slow to respond to criticism of its price hike—and customers were quick to revolt.
Beware of Advertising that Antagonizes
Sometimes "creative" campaigns can create big branding problems. Groupon, for example, ran a 2011 Super bowl campaign featuring celebrities discussing important causes and then shifting into a rave for a Groupon deal. What was supposed to be satirical came off as cold and uncaring. Groupon was forced to pull the ads and apologize.
There’s nothing wrong with a brand making a big sudden move that’s perceived as a game-changer - as long as it’s a move that’s strategic, innovative and builds on brand perception, instead of diminishing or downgrading it. Although Apple may make a minor mistake here and there, it’s difficult to override the incredible impact of introducing revolutionary products like the iPod, the iPhone and the iPad. But it’s just as difficult to undo the damage of Netflix’s rapid price restructuring that inflicted an overnight 60% price hike on customers. Yes, short-term profits are important, but a long-term brand vision that connects with consumers is more crucial.
[Image: Flickr user Desmond Bowles]